Help to Buy mostly helped high earners, IFS says
Help to Buy Primarily Benefited Higher Earners, IFS Reports
A recent study by the Institute for Fiscal Studies (IFS) reveals that the UK government’s Help to Buy initiative in England mainly aided individuals with higher incomes, particularly in regions where property prices are lower. The scheme, launched in 2013 under the Conservative administration, was designed to assist first-time buyers lacking financial support from family or friends. However, its impact on social mobility has been described as “limited” by the report.
Help to Buy comprised two key components: a mortgage guarantee program and an equity loan program. The mortgage guarantee scheme allowed buyers to secure mortgages with just 5% deposits, while the equity loan provided a government-backed 20% loan for new-build properties, reducing the required down payment. These measures aimed to increase mortgage access and affordability for first-time buyers. Despite this, the IFS found that the scheme’s benefits were skewed toward those with greater purchasing power.
By 2014–15, the Help to Buy program had supported roughly a fifth of first-time buyer purchases in England. Yet, the IFS argues that this assistance did not significantly improve housing affordability for many. The study highlights that participants with higher incomes gained the most, as the scheme increased maximum affordable prices among those already capable of spending more. Critics suggest that the loan scheme inadvertently raised property prices by encouraging higher spending, while defenders credit it with boosting home ownership and driving a surge in housing supply.
Regional Disparities in Scheme Impact
The report notes that the equity loan schemes are no longer open to new applicants in England and Scotland, with Wales set to phase them out in September. Northern Ireland has not seen a similar initiative. Meanwhile, the mortgage guarantee scheme remains active nationwide. The IFS emphasized that the scheme’s focus on new-build properties, which are less common in expensive areas like London and the South East, limited its effectiveness for lower-income buyers in high-cost regions.
“Help to Buy policies can help first-time buyers get on the housing ladder, in theory, but can also push up house prices,” said Bee Boileau, a research economist at the IFS.
Defenders of the scheme, such as the Home Builders Federation, argue that it played a pivotal role in doubling housing supply within a few years of its launch. This growth, they claim, created tens of thousands of jobs and spurred affordable housing through private sector incentives. Shadow housing secretary James Cleverly added that the policy “gave many thousands of people the chance to realise the dream of homeownership.”
A spokesperson for the Department of Housing, Communities and Local Government stated that Help to Buy was introduced and discontinued by the prior administration, with an ongoing evaluation of its outcomes. The spokesperson also noted that while no new scheme is planned, a comprehensive mortgage guarantee initiative is now open to more young families and renters. “This new program will open the door to homeownership for a broader range of individuals,” they said.
